Consumer Discretionary

Netflix Stock Has Had a Great Year. 3 Risks That Could Halt the Rally. — Barrons.com

/ / Consumer Discretionary /

By Adam Clark Netflix regained its position as a stock-market darling over the past 12 months as the market applauded its profit and subscriber growth. However, there are reasons to think the streaming platform might have peaked for now, according to Citi analysts. Netflix stock has climbed 48% over the past 12 months through to Monday’s close. It’s a rally that has Citi analyst Jason Bazinet turning cautious and lowering his rating on the stock to Neutral from Buy, while keeping a $500 target price. Netflix shares were down 2.0% at $475.21 in premarket trading on Tuesday. “We see three potential risks. First, we believe 2024 revenue estimates may be a tad too high. Second, we see scope for 2025 content investments to exceed Street estimates. Third, we cannot rule out potential acquisitions,” wrote Bazinet in a research note. Consensus expectations are for Netflix’s revenue growth to accelerate from 6% […]

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Amazon and 2 More Stocks Are Winners as Ad Growth Ramps Up This Year, Analyst Says — Barrons.com

/ / Consumer Discretionary /

Kicking off the year, Amazon.com, Trade Desk, and Meta Platforms are top picks within the internet sector, one Wall Street team says. “We’re updating our thoughts as we enter 2024 and revise our digital advertising growth expectations for the year (see digital growth +8.0% y/y vs. +7.2% y/y prior), we still expect a modest environment for e-Commerce (although easing inflation doesn’t hurt), and our subscription group is a mixed bag,” Stifel analysts led by Mark Kelley wrote in a Monday report. The team highlighted a few things they’re paying attention to regarding the stock trio. For Amazon, points to watch include margin improvement, and new advertising formats. For the digital marketing company Trade Desk, Stifel is focused on continued market-share gains, while for Meta, it is looking at Reels, its short-video platform, and Advantage+, an artificial intelligence initiative for advertisers. Stifel rates all three stocks at Buy. It lifted its

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Delta Air Lines Expected to Report Q4 Earnings Near Midpoint of Guidance, BofA Says

/ / Consumer Discretionary /

Delta Air Lines’ (DAL) Q4 earnings are expected to be $1.16 per share, close to the midpoint of the company’s outlook of $1.05 to $1.30, BofA Securities said Monday in a note. The company is set to release results on Friday. For Q1, BofA expects Delta’s EPS to be $0.57, higher than the consensus of $0.33. For full-year 2024, BofA increased its EPS forecast for Delta to $6.26 from its previous projection of $6.09 as the firm now expects 2024 fuel cost per gallon to be $2.61 “given lower fuel costs over the last six weeks of 2023.” BofA reiterated Delta’s buy rating and $50 price objective.

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Lululemon Athletica’s Q4 Guidance Edges up but Low End of Range Could Fall a Penny Short of FactSet Consensus Estimate

/ / Consumer Discretionary /

Lululemon Athletica Inc.’s stock (LULU) fell 1.6% in premarket trading on Monday after the company said it could fall a penny short of the FactSet consensus estimate at the low end of its fourth-quarter profit guidance. Lululemon said it now expects to earn between $4.96 and $5 a share in the fourth quarter, compared to the FactSet consensus estimate of $4.97 a share. The apparel maker had previously projected fourth-quarter earnings of $4.85 to $4.93 a share. Lululemon Athletica now expects fourth-quarter revenue of $3.17 billion to $3.19 billion, against the analyst estimate of $3.19 billion. The company’s earlier guidance was for revenue of $3.135 billion to $3.17 billion. “We are pleased with our performance during the holiday season,” the company said. -Steve Gelsi

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Lululemon Stock Drops as Guidance Boost Isn’t Enough — Barrons.com

/ / Consumer Discretionary /

By Emily Dattilo Shares of Lululemon Athletica were trading lower after the maker of exercise apparel raised its financial forecasts for the fourth quarter but the earnings guidance at the low end was just shy of analysts’ estimates. The stock was down 1.4% to $484.20. Over the last 12 months, shares have rise 64%. For its fiscal fourth quarter, Lululemon said it now expects earnings of between $4.96 and $5 a share, while analysts had penciled in $4.97, according to FactSet. The previous range provided by the company was earnings of $4.85 to $4.93. The company now expects net revenue of between $3.17 billion and $3.19 billion, higher than Lululemon’s prior call for revenue of between $3.135 billion to $3.17 billion. Analysts were expecting $3.19 billion. It also lifted its outlook for gross margins. “We are pleased with our performance during the holiday season, as guests continue to respond well

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Bearish Southwest Airlines Analyst Says This Company Decision Is ‘A Step In The Right Direction’

/ / Consumer Discretionary /

Shares of Southwest Airlines Co (NYSE:LUV) gained last month after the company reached a tentative agreement with its pilots association. The Dallas-based company is likely to report its full year 2023 earnings at around half of the Street’s expected $3+ per share, while 2024 could prove to be a “transitional year,” according to Bernstein. The Southwest Airlines Analyst: Bernstein’s David Vernon downgraded the rating for Southwest Airlines from Market Perform to Underperform, while raising the price target from $77 to $90. The Southwest Airlines Thesis: The 2024 outlook could be worse than anticipated as the company is facing several headwinds, Vernon said in the downgrade note. The analyst mentioned the challenges as: New pilot contract Secular cost headwinds Fleet constraints “that are adding to network costs” Shifts in demand “that are stressing the companies traditional point to point network model” “These are proving to be difficult to offset with the current lack

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Lululemon’s 4Q Guidance Boost Seen As Positive Despite Share Retreat

/ / Consumer Discretionary /

Lululemon’s upgrade to its 4Q outlook was perhaps a little modest for investors, with the stock edging 0.6% lower. While the athletic apparel brand has a history of beating its 4Q expectations, William Blair analysts Sharon Zackfia and Dylan Carden say the shares retreated due to “revised fourth-quarter outlook only slightly ahead of consensus and a 30%-plus gain in the stock over the last three months.” However, William Blair maintains its outperform rating thanks to its relatively high earnings visibility “courtesy of a higher-income customer demographic and strong brand momentum (strongest global market share gainer in adult active apparel industry over the past four years) and significant opportunity to grow domestic brand awareness.”

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Southwest Airlines (NYSE:LUV) Stock Analyst Ratings

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Southwest Airlines (NYSE:LUV) Stock Analyst Ratings Date Upside/Downside Analyst Firm Price Target Change Rating Change Previous / Current Rating 01/08/2024 -15.37% Bernstein $29 → $24 Downgrades Market Perform → Underperform 01/02/2024 23.41% Evercore ISI Group → $35 Downgrades Outperform → In-Line 12/18/2023 5.78% Citigroup $25 → $30 Maintains Neutral 11/27/2023 19.89% Raymond James $36 → $34 Maintains Outperform 11/13/2023 — Melius Research Downgrades Hold → Sell 11/10/2023 — Exane BNP Paribas Downgrades Neutral → Underperform 10/31/2023 -18.9% Susquehanna $25 → $23 Maintains Neutral 10/31/2023 65.73% Morgan Stanley $50 → $47 Maintains Overweight 10/27/2023 -29.48% TD Cowen $26 → $20 Downgrades Outperform → Market Perform 10/11/2023 -11.85% Susquehanna $30 → $25 Maintains Neutral 10/05/2023 26.94% Raymond James $40 → $36 Maintains Outperform 10/02/2023 — Morgan Stanley Maintains Overweight 09/29/2023 -29.48% Jefferies $25 → $20 Maintains Underperform 09/26/2023 2.26% Bernstein $32 → $29 Maintains Market Perform 09/12/2023 15.48% Citigroup $36 → $32.75

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Domino’s Pizza Enterprises Could Still Restore Margins, Morgan Stanley Says

/ / Consumer Discretionary /

Although the consensus view is that margins at Australia-based Domino’s Pizza Enterprises are now structurally lower versus pre-Covid levels, analysts at Morgan Stanley say the company still has a path to margin recovery. They say margin expansion could be driven by restructuring benefits, improvements in store profitability and food-cost normalization, estimating that elevated food prices have created a greater than 2% margin headwind for Domino’s over the last few years. The analysts, which are bullish on Domino’s, believe the coming months will be crucial for Domino’s investors. “We think FY24 will be an inflection point for key share price drivers,” they say.

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Chipotle Mexican Grill, Inc. (NYSE: CMG) stock Analyst Ratings

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Chipotle Mexican Grill, Inc. (NYSE: CMG) stock Analyst Ratings Date Upside/Downside Analyst Firm Price Target Change Rating Change Previous / Current Rating 01/05/2024 13.56% Oppenheimer $2225 → $2525 Maintains Outperform 01/04/2024 10.19% Stifel $2100 → $2450 Maintains Buy 01/03/2024 1.02% Barclays $1885 → $2246 Maintains Equal-Weight 01/02/2024 25.93% Stephens & Co. $2330 → $2800 Maintains Overweight 12/21/2023 7.94% Wedbush → $2400 Downgrades Outperform → Neutral 12/07/2023 10.19% Raymond James $2100 → $2450 Maintains Outperform 12/01/2023 9.07% RBC Capital $2185 → $2425 Maintains Outperform 10/27/2023 -1.05% TD Cowen → $2200 Reiterates Outperform → Outperform 10/27/2023 -6.9% Morgan Stanley $2010 → $2070 Maintains Equal-Weight 10/27/2023 4.79% Stephens & Co. → $2330 Reiterates Overweight → Overweight 10/27/2023 1.2% Keybanc $2200 → $2250 Maintains Overweight 10/24/2023 2.54% Truist Securities → $2280 Reiterates Buy → Buy 10/23/2023 -16.12% Barclays $1950 → $1865 Maintains Equal-Weight 10/20/2023 -1.05% Wedbush → $2200 Reiterates Outperform → Outperform 10/19/2023 6.82%

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